For the year ending 30 June 2016, XYZ Ltd earns a profit aftertax of $1.05 million. Dividends on 400 000 convertible, cumulativepreference shares amount to $200 000. The preference dividends arenot treated as expenses in the accounts of Lennox Ltd (thepreference shares have been disclosed as equity in the statement offinancial position). As at 1 July 2015 there were 500 000 fullypaid ordinary shares. There were no additional share issues duringthe year.
As at 1 July 2015 there were also:
$250 000 in convertible debentures, which paid interest at arate of 10% per year, and which could be converted to 125 000ordinary shares, at the option of the debenture holder;
20 000 share options currently on issue, with an exercise priceof $2.00;
the 400 000 convertible, cumulative preference shares, whichwere issued in 2010 and are convertible into 120 000 ordinaryshares at the option of the preference shareholders;
Assume the tax rate is 30% and that the average market price forordinary shares during the year was $5
Calculate XYZ Ltdâs:
(a) basic EPS
(b) diluted EPS
For the year ending 30 June 2016, XYZ Ltd earns a profit aftertax of $1.05 million. Dividends on 400 000 convertible, cumulativepreference shares amount to $200 000. The preference dividends arenot treated as expenses in the accounts of Lennox Ltd (thepreference shares have been disclosed as equity in the statement offinancial position). As at 1 July 2015 there were 500 000 fullypaid ordinary shares. There were no additional share issues duringthe year.
As at 1 July 2015 there were also:
$250 000 in convertible debentures, which paid interest at arate of 10% per year, and which could be converted to 125 000ordinary shares, at the option of the debenture holder;
20 000 share options currently on issue, with an exercise priceof $2.00;
the 400 000 convertible, cumulative preference shares, whichwere issued in 2010 and are convertible into 120 000 ordinaryshares at the option of the preference shareholders;
Assume the tax rate is 30% and that the average market price forordinary shares during the year was $5
Calculate XYZ Ltdâs:
(a) basic EPS
(b) diluted EPS